Moscovici pledges budget flexibility, but no privileges for France

“All countries, large or small” should be treated as equals when it comes to reducing their deficits, said France’s Pierre Moscovici as he faced a relentless grilling from Members of the European Parliament at his confirmation hearing today (2 October).

If an excessive deficit procedure is launched against France, “I will pursue this procedure without failing,” Moscovici told MEPs. He said this would be part of his “mission” if confirmed as EU Commissioner for Economic and Financial Affairs.

The French government announced on Tuesday (1 October) that it will face a deficit of €95 billion next year, and fail to keep its budget deficit within the agreed 3% EU limit.

France obtained a two-year delay until 2015, in order to bring its deficit down, in return for promises to reform the French economy, including its ailing pension system.

Many MEPs questioned whether the former French economy and finance minister would be tough enough in applying EU rules to his own country.

Moscovici’s answer was clear. “A country, even France, has to follow the rules. And my role will be to ensure those rules are respected,” he said, indicating that the 2015 budget evaluation process will start with the Commission’s autumn economic forecast.

“If a country does not take the effective actions and does not undertake the necessary reforms there is no doubt, there is no choice, the procedure has to be followed,” Moscovici insisted, stating that he “will do his duty” as Commissioner.

“One principle of vital importance is equal treatment. It would not be acceptable to give privileged treatment to some countries and not others. This is how I am going to act as soon as I take office.”

At the same, “you cannot cut the deficit if you don’t have economic growth,” Moscovici replied in response to questions from Social Democrat MEPs, who want a more flexible approach to deficit reductions.

“It took Germany ten years to change from the sick man of Europe to the strongest economy. France also needs time,” Moscovici pleaded.

This triggered renewed questions from MEPs over whether this would mean a special derogation for France in bringing down its own deficit.

Soon enough, the Frenchman started to sound like a broken record. “I have said it and I will say it again: I am here to apply the rules, not to defend derogations. The rules have to be credible. They are intelligent, they are not stupid. They take into account the situation of each country,” he said in reference to the exceptional circumstances that countries can invoke to delay budget action.

“France has not broken the rules. Everything has been done within the rules,” he said, referring to the two-year respite granted to Paris in 2013 in exchange for reform promises. France obtained a delay, according to those rules so it will be “up to the Commission to decide” whether a delay should be obtained, “not to a single government unilaterally,” Moscovici said in English.

“Our system is intelligent, it is not rigid, it takes account of economic circumstances,” Moscovici repeated, explaining that delay clauses can be activated “on a temporary basis” under the EU’s rulebooks.

“Flexibility is not changing the rules. It is not an unbridled interpretation of the rules,” he said, explaining it is the “the structural effort” that matters in the end.

“As Commissioner, I would be there to safeguard the rules and use the room for manoeuvre within the rules,” he said.

One MEP may have provided the final analysis in the debate when he humorously asked Moscovici whether he had become schizophrenic.

Background

Jean-Claude Juncker, the new President of the European Commission, announced the distribution of portfolios among his new team on 10 September.

Among the new Commissioners, due to take up their posts on 1 November, are 18 former (prime) ministers. The President has announced that the new Commission will be "very political".

The new Commission must now be approved by the European Parliament, who will interview the Commissioners between 29 September and 7 October.

During these two weeks of hearings, the 27 Commissioners will be interviewed by MEPs from relevant parliamentary commissions.